When Cleantech Came of Age

The days of discussing cleantech viability are over. At this point, we need to start looking at how the industry will mature and grow. The industry is moving so quickly that if we don't start now, we risk getting behind the curve. And no one makes money behind the curve.

As cleantech costs continue to fall, capacities expand, and the grid gets smarter, an interesting future is emerging — an interesting energy future, yes... but an interesting cleantech business future as well.

Buying a seat at the table

Did you really think the industrial conglomerates of this world were going to stand by and let clean business billions pass them by?

Companies like that — the GEs (NYSE: GE), the Siemens (NYSE: SI), the Ciscos (NASDAQ: CSCO), the Dows (NYSE: DOW), the Honeywells (NYSE: HON), the big utilities — haven't gotten where they are by resting on their laurels. They see how profitable the cleantech future is. And you can be sure they'll get their piece.

The seeds of their plans were planted long ago. GE launched Ecomagination in 2005. IBM has spent millions over the past few years telling us they're at the forefront of building smart cities.

That was the in-house stage. As new technologies are developed and new, successful companies emerge, we're about to see the acquisition stage. And it won't be just big fish swallowing little fish. With financing and credit still extremely tight, the imminent commoditization of solar, and the maturation of the industry in general, the number of strategic mergers is also on the rise.

If you can't beat 'em...

Just this year...

Cisco (CSCO) made an undisclosed equity investment in Grid Net, a company seeking to build broadband networks to connect utilities and their customers. GE and Intel (NASDAQ: INTC) have also invested.

Siemens took a 49% stake in A2SEA, an offshore wind farm developer, worth $142.5 million. It also took a 17% stake in Archimede Solar, which makes solar thermal receivers that use molten salt as the transfer fluid.

Honeywell bought demand response company Akuacom in order to compete with the likes of Comverge (NASDAQ: COMV) and EnerNoc (NASDAQ: ENOC). And it furthered its smart grid reach by buying E-Mon, a smart energy submeter provider, from Branford Castle.

(When I signed up for BGE's Peak Rewards program, I was issued a Honeywell-branded cycling switch for my A/C.)

And do you remember when Areva — the nuclear giant Areva — bought the much-hyped Ausra?

The most exciting sector for M&A — because it's currently the most lucrative — has been energy storage, efficiency, infrastructure, and communication, otherwise known as the smart grid, with 53 deals amounting to almost $2 billion.

And what's most exciting is who's trying to play the smart grid game. You've got the Honeywell and ABB deals from above. But NRG Energy (NYSE: NRG) — this is a utility, people — also joined the fray when it bought HVAC efficiency specialist Northwind Phoenix.

Energy magnate Dominion Resources (NYSE: D) completely validated the smart grid when it took a stake in Power Tagging Technologies. Dominion said its new friend has “the technology that will play a key role in transforming infrastructure into a truly smart grid.”

This is where we are.

On the one hand, coal-dependent utilities, Fortune 500 tech firms, global industrial powerhouses, and stalwart chemical companies are all embracing the cleantech future; staking their financial future on it, in fact. And on the other hand, we have sector-specific consolidation; strategic mergers aimed at improving technology and reducing costs to fuel the next stage of growth.

The alternative future isn't alternative at all. It hasn't been for a while now.

Peabody's (NYSE: BTU) taking part, for crying out loud. One of the world's largest coal companies just paid $15 million for Calera, a company that turns carbon dioxide into green building products.

After you let the hypocrisy of that sink in, take a moment to think about what this massive switch means for your energy portfolio.